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There’s a Time and Place for Everything

April 04, 2018

As I take the helm of Profitable Investing, the portfolio is well-placed for the time, as there continue to be many stocks that are not just hanging in there, but thriving. Microsoft Corporation (NASDAQ:MSFT ) is up 7.17% year to date—showing that the power of transformation is proving out for us. The company continues to advance with its Azure cloud services. And its move from one-off product sales to subscriptions is building a wave of future cashflows over time.

With NextEra Energy (NYSE:NEE), up some 5.31% during the mayhem that’s been 2018, we see a blend of renewable energy along with the stability of natural gas in markets in the U.S. and Canada bolstering revenues. And the market is buying it.

Further on the dependability of utilities during market storms, our British power and data communications company SSE plc (OTCMKTS:SSEZY) is up some 3.54% so far this year. Prospects remain positive with its steady demand within the British Isles fueling our ample, near 7% dividend.

When some might be reaching for an adult beverage to get through this volatile market—the smarter beverage of choice has been our bet on coffee with Starbucks Corporation (NASDAQ:SBUX) It continues to buck challenges of competing retail food and drink purveyors with strong revenue growth. So far since it was added to the Total Return Portfolio back on February 8th, the stock is up some 7.66%, with further product offerings at premium prices that the market keeps bearing. I expect this stock to continue to percolate for some time to come.

And as noted in the article I contributed in the April issue, the REIT sector is one of the best sectors to buy right now while others are ignoring the opportunities.

Sure, we’ve witnessed some minor bumps in the Fed’s target range for the federal funds rate—but with broad inflation at bay, there’s no pressing need for aggressive moves in tightening money and credit conditions.

The market has pushed some of the best of these tax-advantaged, big dividend payers to some of the best bargains in a while.


Bloomberg US REIT Index (Source: Bloomberg)

One of the more attractive of the REITs is our Digital Realty Trust (DLR), which, like Microsoft noted above, is cashing in on the drive to utilize the cloud by more and more companies and individuals. Digital Realty owns and operates data centers that provide the backbone for cloud services. And with rising demand, the company is well placed for the time to be able to raise fees for their facility usage. No wonder it is bucking the REIT market by actually rising since it was added to the model portfolio in the March issue by some 4.09%.

Also a strong play during market pullbacks, is a recent addition to the Total Return Portfolio—the iShares Core S&P 500 ETF (NYSEARCA:IVV).

This ETF focuses its weighting on the largest of the S&P 500 companies. And as the market has its knee-jerk reactions to a tweet or rant from 1600 Pennsylvania Avenue, that’s the time to place more of your cash into this fund. It’s also why having cash on hand is always a great idea, so you can deploy it on bargain-buying opportunities in the market.

Overall, we always need to focus, not on the noise of the moment, but what will drive our stocks. The US continues to see economic expansion. This Friday we should see positive news on jobs. And with tax savings with the Tax Cuts and Jobs Act of 2017 (TCJA), earnings season will be upon us in the coming weeks with results that will begin to positively reflect corporate income tax savings for investors.

Likewise, with surging demand from foreign investors, U.S. Treasury yields are slipping, therefore providing a cushion for benchmark intermediate interest rates for corporate borrowing. All better for the market.

So, I’ll end with something I learned from John Harrison … in order to be successful in the market, you need to know where you are and why so that you’ll know your portfolio is still steady on the course even during volatile days.

Neil George is the editor of Profitable Investing, a low-risk value oriented advisory service dedicated to helping long-term investors achieve their growth and income goals safely and systematically. His market commentary and insights have been featured in such prominent financial publications as The Wall Street Journal and Barron’s as well as on Bloomberg, CNN and NBC.